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Yost received 300 NQOs (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $26 per share). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $26 per share. Yost exercised all of his options when the share price was $52 per share. Two years after acquiring the shares, he sold them at $80 per share. Note: Input all amounts as positive values. Leave no answer blank. Enter zero if applicable. a. What are Yost's taxes due on the grant date, exercise date, and sale date, assuming his ordinary marginal rate is 35 percent and his long-term capital gains rate is 15 percent? ✔ Answer is complete and correct. Grant date Exercise date Sale date Taxes Due 0✓ $ $ 27,300✔ $ 12,600 Show Transcribed Text Grant date Exercise date Sale date b. What are Cutter Corporation's tax consequences (amount of deduction and tax savings from deduction) on the grant date, the exercise date, and the date Yost sold the shares? Amount of Deduction 3 Tax Savings Ć

Yost received 300 NQOs (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $26 per share). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $26 per share. Yost exercised all of his options when the share price was $52 per share. Two years after acquiring the shares, he sold them at $80 per share. Note: Input all amounts as positive values. Leave no answer blank. Enter zero if applicable. a. What are Yost's taxes due on the grant date, exercise date, and sale date, assuming his ordinary marginal rate is 35 percent and his long-term capital gains rate is 15 percent? ✔ Answer is complete and correct. Grant date Exercise date Sale date Taxes Due 0✓ $ $ 27,300✔ $ 12,600 Show Transcribed Text Grant date Exercise date Sale date b. What are Cutter Corporation's tax consequences (amount of deduction and tax savings from deduction) on the grant date, the exercise date, and the date Yost sold the shares? Amount of Deduction 3 Tax Savings Ć

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Yost received 300 NQOs (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $26 per share). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $26 per share. Yost exercised all of his options when the share price was $52 per share. Two years after acquiring the shares, he sold them at $80 per share. Note: Input all amounts as positive values. Leave no answer blank. Enter zero if applicable. a. What are Yost's taxes due on the grant date, exercise date, and sale date, assuming his ordinary marginal rate is 35 percent and his long-term capital gains rate is 15 percent? ✔Answer is complete and correct. Grant date Exercise date Sale date Taxes Due S $ 27,300 $ 12,600 0✓ Show Transcribed Text Grant date Exercise date Sale date b. What are Cutter Corporation's tax consequences (amount of deduction and tax savings from deduction) on the grant date, the exercise date, and the date Yost sold the shares? Amount of Deduction Tax Savings
Transcribed Image Text:Yost received 300 NQOs (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $26 per share). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $26 per share. Yost exercised all of his options when the share price was $52 per share. Two years after acquiring the shares, he sold them at $80 per share. Note: Input all amounts as positive values. Leave no answer blank. Enter zero if applicable. a. What are Yost's taxes due on the grant date, exercise date, and sale date, assuming his ordinary marginal rate is 35 percent and his long-term capital gains rate is 15 percent? ✔Answer is complete and correct. Grant date Exercise date Sale date Taxes Due S $ 27,300 $ 12,600 0✓ Show Transcribed Text Grant date Exercise date Sale date b. What are Cutter Corporation's tax consequences (amount of deduction and tax savings from deduction) on the grant date, the exercise date, and the date Yost sold the shares? Amount of Deduction Tax Savings
c. Assume that Yost is "cash poor" and needs to engage in a same-day sale in order to buy his shares. Due to his belief that the stock price is going to increase significantly, he wants to maintain as many shares as possible. How many shares must he sell in order to cover his purchase price and taxes payable on the exercise? Number of shares to be sold Show Transcribed Text d. Assume that Yost's options were exercisable at $31 and expired after five years. If the stock only reached $29 during its high point during the five-year period, what are Yost's tax consequences on the grant date, the exercise date, and the date the shares are sold, assuming his ordinary marginal rate is 35 percent and his long-term capital gains rate is 15 percent? Grant date Exercise date Sale date Ĉ Taxes Due
Transcribed Image Text:c. Assume that Yost is "cash poor" and needs to engage in a same-day sale in order to buy his shares. Due to his belief that the stock price is going to increase significantly, he wants to maintain as many shares as possible. How many shares must he sell in order to cover his purchase price and taxes payable on the exercise? Number of shares to be sold Show Transcribed Text d. Assume that Yost's options were exercisable at $31 and expired after five years. If the stock only reached $29 during its high point during the five-year period, what are Yost's tax consequences on the grant date, the exercise date, and the date the shares are sold, assuming his ordinary marginal rate is 35 percent and his long-term capital gains rate is 15 percent? Grant date Exercise date Sale date Ĉ Taxes Due
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